In Testing the Null Hypothesis H₀ = $p _ { 1 } - p _ { 2 }$

question 20

Multiple Choice

In testing the null hypothesis H₀ = $p _ { 1 } - p _ { 2 }$ = 0, if H₀ is true, the test could lead to:

• A) a Type I error.
• B) a Type II error.
• C) either a Type I or a Type II error.
• D) None of these choices are correct.

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Definitions:

Consumer Surplus

The gap between the aggregate amount buyers are willing and able to spend for a good or service, versus what they actually spend.

Property Rights

The legally guaranteed rights to own, use, and dispose of assets, including physical and intellectual property.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits received by all parties involved.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, resulting in market stability.